RBA Minutes to Spotlight Interest Rate Decision

AUD

The Aussie dollar opens higher against most majors this morning, while the ASX gave up -0.4% with IT stocks the biggest movers, slumping -2.8%. A tough day for Asian equities as Japan shed -2% trailed by China and Hong Kong’s -1% fall. To the day ahead, eyes remain on the RBA’s Monetary Policy Meeting Minutes which will provide clues as to whether interest rates will move again despite the RBA holding the Cash Rate at 4.1% for the past four months. Thursday’s employment data will no doubt provide further insight into what the RBA will do on November 7th.

USD

AUDUSD gained steady ground over the past 24h, recovering from a three-day losing streak to open at 0.6338. Wall St. rebounded overnight with the NASDAQ closing +1.2%, the S&P +1.1% and the Dow Jones +1.0%. The US Empire State Manufacturing Survey for October printed at -4.6, down from 1.9 although better than expectations of -6.0 as business activity edged lower in New York State. Tonight’s Industrial Production is expected to remain flat, while headline Retail Sales are expected to tick up +0.3% with the Core figure at +0.2%. Consumption is roughly two-thirds of the US economy – the world’s largest, so any print off-expectations typically brings some movement to currencies.

EUR

AUDEUR gained slight ground overnight, reaching 0.6013 highs before retracing in the early hours to open at 0.6001. The DAX and CAC each gained +0.3%. This evening, markets will eye off the German ZEW Economic Sentiment in order to gauge the relative 6-month economic outlook for Germany. The print is expected at -9.1, being a tad better than the previous -11.4.

GBP

AUDGBP moved higher throughout yesterday, reaching 0.5209 highs at 7pm before retracing to open relatively flat at 0.5189. The FTSE gained +0.4%. It’s a busy week for the Pound, with employment data today, followed by inflation tomorrow and retail sales on Friday. This afternoon, the Average Earnings Index 3m/y is expected at 8.3%, lower than the previous figure as the Bank of England’s rate hikes continue to cool the economy with job growth dropping off sharply. Notably, job creation fell by 207k in the 3 months to July, the sharpest decline in over 3 years, with the 3 months to August expected to indicate a further decline of -195k in the 3 months to August. No doubt the Bank of England will be keeping an eye on this ahead of the next interest rate decision in early November.

NZD

AUDNZD opened higher this morning at 1.0703 before rallying off lower-than-expected inflation data to currently sit at 1.0734. Inflation printed at 1.8% in the three months to September (expectations were 1.9%) with the annual comparison at 5.6%, below the previous 6.0%. Markets currently expect the RBNZ to keep rates on hold at 5.5% in the November meeting, with the door open to a potential hike in February.